2Strong upward trends for young Asian tigers

Cargo volumes continue to grow. In January, the WorldACD Index - tracking worldwide volume changes corrected for seasonal patterns - went up from 107.7 to 108.2, its seventh consecutive monthly increase. January-volumes were up by 6.4% y-o-y, accompanied by a USD-yield drop of 1.9%. Interestingly, general cargo did better than the specific product categories. The usual January-over-December revenue drop was smaller this time: -7% (in USD) against -10% a year ago. Thus, given what air cargo experienced in 2013, the year started reasonably well. Percentage growth was driven particularly from China and Hong Kong, but also from South America and Northern Europe.

Over the past year, the largest volume growth in absolute terms was realized in the origins Western Europe, South Asia and South East Asia. Within these regions, the many airlines reporting their worldwide business into WorldACD’s database, showed the largest increase in volume and revenue in Bangladesh and Vietnam, each of these countries beating their much larger neighbors India and China. More than enough reason to take a closer look at the next generation Asian tigers in South Asia and South East Asia. We reviewed the performance of the countries in these two regions.

From 2011 through 2013, South Asia’s volume increased by 18%. Since India’s volume, (around 70% of the total) grew by only 8% during the same period, it follows that Bangladesh, Pakistan, Sri Lanka, Nepal and the Maldives combined, grew spectacularly. And two years of steady yield decline in the world at large, seems to have passed by two of these five countries: they combined impressive volume growth with even more impressive USD-yield improvements.

In the same period, South East Asia’s volume (excluding Indonesia) increased by 4%, small but still impressive, given the fact that the traditional cargo power houses Singapore, Thailand and Malaysia all three dropped in volume…. Indonesia showed very strong returns, largely due to domestic business growth. Particularly strong performances were noted for Vietnam and Cambodia, whilst air cargo from the Philippines experienced a small decline.

Regional airlines play the main role in the growth spurts: carriers based in the Gulf drive growth in South Asia, and their colleagues from Asia Pacific in South East Asia.

We see a similar picture among forwarders. The regional and local forwarders are strong. In Vietnam, Indonesia, Myanmar, Cambodia, Brunei, Laos and the Philippines combined, the world’s top-20 forwarders have a share of 23% of outgoing business. From the smaller cargo countries in South Asia, their share is only 14%. Not surprisingly, their share in air cargo to both groups of countries is higher (30%), but still way below their worldwide share of 45%.

Talking about the differences between outgoing and incoming air cargo, the countries concerned changed their balance between outgoing and incoming air cargo from 58/42 in 2012 to 56/44 in 2013. Perishables are very important export items (almost 70% of specific air cargo and 17% of all cargo), but they also figure prominently in imports: 58% resp. 8%. The young tigers are learning to roar. They also look more outward, not only for markets to serve, but also for supplies.